$180m content fund scheme set for take-off

The planned pilot scheme on how to use the Nigerian Content Fund meant to aid Nigerian oil and gas companies secure loans from banks for projects and capacity development, will start this month, it was learnt.

The fund was established in view of the constraints experienced by local firms in accessing loans from banks. By virtue of the Act establishing the fund, one per cent of contracts in the oil and gas industry go into the fund, which has netted about $180 million.

The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Ernest Nwapa, said the board would start a pilot scheme with two or three member-companies of the Petroleum Technology Association of Nigeria (PETAN) on how the fund would be used.

He also explained that the deployment of fund is structured in such a way that cash would not be given to a beneficiary company, but the board through the fund would guarantee and pay up to 50 percent of the interest accruals on a loan a beneficiary company is seeking from a bank.

The Chairman of PETAN, Emeka Ene, said the pilot scheme, which would have started much earlier, would take off this month. He said the delay was due to time spent on educating the banks on the unique nature of oil and gas projects and how the fund would be used through the banking system.

He said: “In case of the pilot scheme, the financing process is much slower than we anticipated simply because the board has been educating the banking system on the unique structure of oil and gas projects and the deployment of the fund.

“The NCDMB has been partnering with PETAN to see how this can be rolled out. We expect that the pilot will be in place by March. From there, other companies can tap into the Nigerian Content Fund to grow their companies and be able to fund their contracts with lower cost finance.”

On PETAN’s partnership with NCDMB on the building of industrial parks in the Niger Delta, Ene said: “On the initiative that was announced by the Executive Secretary, I think it is targeted at the grassroots entrepreneurship and manufacturing. The idea is to make some investments at the grassroots where it matters. For instance, simple nuts and bolts, most of them are imported and the technology for manufacturing nuts and bolts is not rocket science.

“Therefore, by going to the grassroots and creating these industrial parks, the idea is to create the enabling environments where these equipment and services would readily available and affordable for the industry.